The target is a game studio from Berlin which specializes in highly customizable and white labelling solutions for online gambling operators.
They differentiate by offering custom development to create unique brands that operators can leverage as part of their marketing efforts.
They offer the casino operators control over their pricing, thus creating long-lasting relationship with their existing customer base. Custom development is made possible thanks to advancements in generative AI. They currently derive €900k EBITDA on €2m Revenues
| Target IRR (%) | 35% | Rationale |
|---|---|---|
| Organic Growth | 15% | In line with online industry peers, company has been growing >50% historically |
| Inorganic Growth | 11% | We constantly leverage the business at 2.5x EBITDA to diversify our client base and geography through the acquisition of smaller studios at 5x |
| Cash Generation | 5% | The 10% annual FCF yields are used to pay down debt |
| Multiple Change | 3% | We buy smaller, less diversified studios at a 25% discount which over 7 years contribute to a 3% CAGR |
| Margin Change | 1% | Business is already >30% EBITDA margins, so economies of scale are reinvested in marketing & R&D to maintain growth and support integration costs. |